Bank of England delivers first rate hike in three years, gilt yields rise
TLT•TLT•TLT•TLT•The Bank of England raised its rate to 4% from 3.75% in an 8-1 vote, its first hike in more than three years. UK gilt yields rose, and money markets priced in one more increase by early next year.
The Bank of England raised interest rates to 4% from 3.75% on Thursday, the first increase in more than three years. The Monetary Policy Committee voted 8-1, with the dissenting policymaker seeking a larger hike. The Bank warned that at least one more increase was likely if the US-Iran conflict continues.
UK gilt yields rose, with the rate-sensitive two-year yield up about 3 basis points to 4.77%. Sterling was little changed against the dollar and slightly firmer against the euro, while London's FTSE index was up 0.7%. Money markets priced in one more rate hike by early next year.
Comments from investors and strategists differed on how many increases may follow. Some said another hike was likely, while others expected only one more or said further moves would depend on how energy costs affect inflation.
